All organizations evolve — sometimes owing to internal motivations or plans,
and sometimes to external forces. For credit unions, the decade-long process
of moving to open charters — whether in the form of a community charter or simply
adding members via an indirect lending program — raises the issue of how to
tell the credit union story to newcomers. They need to ask: “Why should someone
join our credit union especially when there is no connection to the founding
The evolution of membership from affiliation, which is serving an employee,
church or member group, to one based on a value proposition is more than a change
of marketing messages. Because many prospective members already have financial
relationships, credit unions must present a compelling reason for non-members
to join. At the same time they need to avoid the trap of “becoming just like
Why the Issue is Urgent
Field of membership changes are not new, so why is the challenge becoming more
urgent? Two trends are putting this at the top of manager’s agendas.
1. The last 24 to 36 months have been a period of almost “effortless growth.”
Few managers anticipated the double-digit share inflows from members concerned
with the stock market bust. Many did not have to advertise or to pay other
than normal rates to enjoy fund inflows. But as the market rebounds, the days
of easy growth are over. Moreover, real estate loans — especially in the form
of refinancings — fueled loan growth; that demand is now mostly gone.
2. As more credit unions expand their market reach, they are increasingly
running into other credit unions in the same market. It is not unusual in
major cities such as Tampa, Madison, San Diego or Sacramento to find three
to five large credit unions now telling the public that “anyone can join”
their credit union. So how does one credit union tell the public why it is
different from another—especially when the historical FOM heritage is no longer
Re-branding with New Names
This effort at market repositioning is sometimes most clearly seen in name changes.
Some credit unions make an effort to create a whole new “brand” identity while
others try to incorporate a thread of continuity with the past.
A sampling of efforts at new identities are:
Austin Metropolitan to Velocity
Banta Community to Prospera
Seattle Telco to Watermark
Several approaches that retain a link with the past include:
Iowa Postal becomes First Class
IBM Mid America Employees becomes Think
Marine Air changes to Patriots
Dallas Postal becomes Neighborhood
Some credit unions still retain a name after the sponsor or employer has gone
away, such as GTE Federal Credit Union, because the credit union has established
its own identity. In every case, however, the challenge is how to communicate
value or promise via brand to prospective members.
How to Grow New Members
At two recent meetings credit union managers described this challenge as one
of self-definition. For some the issue was how they could differentiate themselves
from their peers. For others, who had decided against a broad public appeal,
the tactic was to find a new point of difference from their historical roots.
In both cases the question was how to recruit new members as the traditional
sources of growth peter out.
Several managers said they felt the challenge was that of learning how to manage
the more complex range of choices facing a “public” institution. Growth for
these, they said, requires a different set of processes, ones dealing with the
likes of branding, site selection or partnering. But others said that with rare
exceptions, an individual credit union would not be able to outbranch, outmarket
or even outflank the major competitors on most operational dimensions — credit
unions are just too small.
The Search for Differentiation
A number of credit unions at the conferences shared their recent efforts. For
example, one credit union that had the words “community” and “first” in its
name, said “we try to live our name.” This credit union wants to become the
local financial institution. To do this it has put branches in four high schools
as one aspect of an effort to raise financial literacy in the areas it serves.
The manager believed that credit unions were “all about people” and this meant
investing in education for both staff and members.
Another CEO, whose credit union has moved from serving municipal employees to
a community of several million, said he and his credit union were focusing on
serving their market’s immigrant populations. The manager reported that 12%
of the U.S. population and 15% of full-time employees are foreign-born. Many
of these persons have little experience with credit or savings but rather deal
in cash. This credit union is “going back to its roots” to focus on serving
the new generations of Americans.
Another credit union reported a similar strategy of returning to its core. It
had an approved conversion to a community charter but, once all of the options
were examined, decided instead to focus on the educational community from which
it had been created. The focus would be on recruiting students and adding value
to all services by helping members “be smart with their money.” The education
focus was based on the members’ need for advice, a critical factor in the choice
of many financial products.
Another credit union, also shunning the public media, decided to refocus on
SEG marketing. It is creating multiple Websites with different URLs — albeit
with a common home banking solution — to customize its marketing to its key
groups. By reinforcing the “affiliation” and target marketing strategy, the
credit union seeks to maintain its name and historical connections even as the
number of members still working with the primary employer becomes a minority
of total membership.
Another credit union that says it is “numbers driven” tries to communicate its
unique value by declaring an annual bonus dividend. Each of the last five Decembers
it has declared a rebate, now totaling more than $12 million. This rebate tactic
is how the credit union demonstrates its tangible difference from other financial
Identity and Advantage
Certainly the move to open charters has created a demand for new capabilities
in all areas of “retailing.” But the challenge in an economy with far more financial
institutions per capita than any country in the world is not just mastering
new techniques. It is how best to answer the question of why we exist to serve
members when many other organizations claim the same. The solutions credit unions
devise may be the key to sustaining the double-digit momentum of the past several